OPEC Will Not Cut Output, Soothing Jitters in the Market

By JAD MOUAWAD

Published: February 1, 2006

OPEC ministers said Tuesday that they would keep their oil production levels unchanged for the time being, stressing that supplies were secure despite tension over Iran's nuclear program.

Although the decision had been widely anticipated, it still helped ease some of the concern on oil markets, where prices remained short of record levels. On the New York Mercantile Exchange, crude oil for March delivery declined 43 cents, to $67.92 a barrel, after touching an intraday low of $67.35.

''The market is actually very, very well supplied,'' the Saudi oil minister, Ali al-Naimi, said after the meeting here. ''Inventories are adequate, cover days are great,'' he said, referring to the number of days that oil supplies will meet daily demand. ''So, what else do you want from OPEC? We have come in and replaced any losses in supplies from anywhere.''

OPEC is now producing around 30 million barrels of oil a day, its highest output in more than a quarter-century. Excluding Iraq, the group's formal quota will remain at 28 million barrels a day.

In the end there was little of the surprise or tension that typically surrounds meetings of the Organization of the Petroleum Exporting Countries, which accounts for half the world's oil exports and about a third of all production. Although Iran had suggested last week that OPEC reduce its output, delegates here said that the proposal was never officially made. Venezuela, which initially endorsed a cut in output, backed away from the proposal.

The Iranian envoy sought to dispel fears that his country's oil industry might be caught up in the nuclear dispute. Iran, OPEC's second-largest producer, exports about 2.5 million barrels of oil a day, which is more than other producers can make up for, given the tightness in supplies.

''We have no reason to stop our exports,'' the Iranian oil minister, Kazem Vaziri-Hamaneh, said. ''We are not mixing politics with the economic decisions on this issue. We are not mixing oil with politics.''

Despite such assurances, world oil markets are expected to remain focused on Iran and Vienna this week. The prospect of a confrontation over Iran's nuclear program has contributed to a rise in prices the last couple of weeks and could send prices even higher if the standoff worsens.

The International Atomic Energy Agency is expected to vote on a European-American proposal to refer Iran's nuclear activities to the United Nations Security Council. The atomic energy agency, also based here, is to meet on Friday.

OPEC called for Tuesday's special meeting last month in Kuwait. At the time, prices had dropped to around $55 a barrel and the group was concerned about the possibility of further declines. But prices have since rebounded close to record levels above $70 late last summer, when oil production was severely disrupted by hurricanes in the Gulf of Mexico. That made it extremely unlikely, and greatly unpopular politically, for OPEC to consider any cuts in output on Tuesday.

High energy prices are once more on the agenda in the United States, where politicians are railing against record profits at Exxon Mobil and other big companies. President Bush has spoken recently about energy security and the need for alternative fuel for automobiles.

Here in Vienna, OPEC ministers were a little more nervous than usual about whether high prices would end up hurting economic growth and lead to a drop in oil consumption. That concern was underlined in the meeting's closing statement, which said that the group would ''continue exercising vigilance in monitoring the market, in view of the potential risks and uncertainties identified.''

But some oil ministers, including those from Qatar and Libya, have started talking of a possible cut in output when OPEC next meets on March 8. ''We've very pragmatic,'' the Qatari minister, Abdullah bin Hamad al-Attiyah, said.